When determining equilibrium, we take consumption equal to C= ¢ + c' y where ¢ is the autonomous consumption or minimum consumption that would take place even in absence of income.
What could be the consequences on equilibrium income if the autonomous consumption ¢ was negative?

1 Answer
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I cannot see any way to have negative autonomous consumption. I believe autonomous consumption's extreme is zero if there's a kind of superheroes who don't need water, electricity and food to live and they save everything they earn. But in a case like this, there's no reason for having aggregate supply at all as nobody will buy the goods in first place.

$\begingroup$Yes, you are right. It doesn't seem like a plausible case in reality but like a few hypothetical cases if we consider hypothetically, autonomous consumption was ever negative how could it impact the equilibrium?$\endgroup$
– SDMJan 28 '17 at 12:24

$\begingroup$Also, when we talk about autonomous consumption we are assuming that the consumer s are borrowing to carry on their consumption and since it's a static model, can we assume that the consumers are lending at that particular time and thus, autonomous consumption is negative?$\endgroup$
– SDMJan 28 '17 at 12:34

$\begingroup$I suppose we talk about Aggregate Demand/Supply Equilibrium. In this case, $AD=C+I+G+NX$. If the economy is closed we just remove $NX$ from the formula. The autonomous consumption is just the constant term of $C$. If the constant decreases, then $AD$ shifts to the left (just look it mathematically since everything is linear).$\endgroup$
– Commissar Vasili KarlovicJan 29 '17 at 0:26